Travel industry expects short term pain but long term gain; New Survey

8 July 2010

The UK travel industry is bracing for another year of relatively low growth and subdued consumer confidence next year, but travel companies remain optimistic that Government spending cuts will have minimal impact on their operations and 2012 and 2013 will offer increasingly positive operating conditions, according to the annual Barclays Corporate Travel Forum Survey.

In the poll of 110* senior travel industry executives, almost two thirds of respondents said consumer confidence would either remain the same or decrease, compared with just 38 per cent predicting improving confidence. This was supported by the fact that just 43 per cent of travel executives believe business conditions for their operation would improve in 2011.

When examining this year’s growth rates, however, confidence in the industry was more apparent, with more than a third (35 per cent) of respondents experiencing at least a 10 percent increase in sales volumes this year, including 23 per cent that enjoyed more than a 20 per cent increase.

Value was more subdued however, with just 14 percent of travel companies surveyed seeing the value of their sales per passenger increase by more than 10 percent, and only four per cent of travel growing per passenger sales value by more than 20 per cent in the year to date. The vast majority (78 per cent) saw sales value stay the same or increase in single figures only.

Chris Lee, Head of Travel, Barclays Corporate, said
“Travel companies are now demonstrating a growing confidence in their long term prospects, which stems in part from a general resilience in the travel industry throughout the recession, with an annual holiday moving from a ‘want’ to a ‘need’ amongst much of the UK travelling public.

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“While there was certainly no consensus on what the industry would look like in a few years time amongst operators at the Barclays Corporate Travel Forum, there was little doubt that this resilience would result in a continued trend of fewer failures in the industry than expected during and post the recession.”

Long term prospects for the travel industry were expected to be bright, with 73 per cent of travel companies surveyed predicting conditions would improve for their business in 2012 compared with this year, while 85 per cent predict their business will be better off in 2013.

There is also little concern about Government budget cuts, with 23 per cent of respondents expecting no impact from a public sector spending squeeze, and another 69 per cent predicting only marginal effects.